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Update: Grain markets are now expected to be slightly firmer on the open after the Federal Reserve -- along with five other central banks -- moved to improve liquidity for banks.The U.S. dollar index has weakened considerably on the news. The copy below was written prior to the announcement.
Overnight highlights. Following are highlights of overnight trade and opening calls:
Corn: 8 to 9 cents lower. After just back-to-back days of slight gains, corn futures were hit with profit-taking overnight amid dollar strength. Traders ignored news China will cut its reserve it requires of its banks, as well as signs of progress in the euro-zone debt crisis. Instead, focus is on end-of-the-month position squaring and it's not been a good month for bulls. March corn is around 60 cents lower than the last trading day of October.
Soybeans: 5 to 7 cents lower. Futures were weaker overnight following two days of slight gains to maintain the recent choppy tone. Overnight, China began taking steps to ease concerns about its slowing economy by dropping the reserve requirement by a half-point for banks effective Dec. 5. This is a positive development for importers looking to secure lines of credit to import U.S. goods, but traders anticipated the move. Instead, traders are focused on evening positions to end the month and global economic uncertainties.
Wheat: 3 to 5 cents lower. Wheat saw spillover from neighboring pits, as well as slight dollar index strength. Without fresh demand news to digest, wheat remains in a follower's role, although yesterday was the upside leader amid value buying and basis improvement. March Chicago wheat returned above $6.00 yesterday and held above that support overnight.
Live cattle: Mixed. Futures are expected to be mixed, with support coming from expected strength in the U.S. stock market. However, weakness in the beef market has raised expectations a near-term high has been posted. Yesterday, Choice beef values softened 98 cents and Select was down 46 cents, but movement picked up at 169 loads. Look for price action to be choppy as traders wait on cash trade.
Lean Hogs: Mixed. Futures are expected to be mixed although the cash market is called steady to firmer. The reason -- winter-month futures already have cash improvement priced in. Pork cutout values slipped 16 cents yesterday and packers' profit margins have tightened. While the cash market is expected to be steady to firmer again today, packers will be hesitant to raise bids further unless pork values continue to improve.